More transactions are expected in the commercial property market, triggered by the recent interest-rate hike.
Pace Property Group MD David Green says that in the investment property market, consisting of offices, industrial and retail properties, sellers had high expectations of achieving their prices while buyers' perceptions of value were far lower, and they did not expect a rate hike.
"For that reason the sale transactions have not been happening. The sellers want too much money, and the buyers do not see the value."
Green says the 50-basis-point hike in interest rates almost two weeks ago should soften sellers' price expectations and help to normalise the market.
Coupled with the prospect of future interest-rate increases, sellers could start seriously considering disposing of their investments. "This creates opportunities for buyers, and it also normalises pricing."
The South African Listed Property Index has come down 14% since May 12.
Green says this is proof that investor confidence in property has "dropped back" because these listed property stocks are underpinned by fixed-property portfolios.
Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge
